ANOTHER peer-to-peer (P2P) lender has told investors that it wouldn’t be able to pay them back, highlighting risks to the country’s broader financial system.

Hangzhou-based Xinhehui told investors at a meeting that it won’t be able to make repayments on a total of 2.26 billion yuan (US$330 million) of products issued to them, according to attendees and videos of the meeting. More than 17,000 individual investors are affected.

Shanghai-listed Meidu Energy Corp., which owns about 34 percent in Xinhehui, warned its shareholders in October that there were risks the company wouldn’t meet performance commitments it made to Meidu for 2018.

“My faith in this platform as well as its shareholders, some of which are listed companies, is completely shattered,” said investor Tracy Wang, whose family members put almost 2 million yuan into the platform in total.

About 860 million yuan of Xinhehui products matured Sunday, while another 1.4 billion yuan are due for repayment May 6, according to documents.

A group representing investors affected by the default rejected a debt restructuring proposal by the platform’s owners which involved swapping their debt for equity in one of its major shareholders. The company would then use its assets as collateral to get loans from Huarong Asset Management Co.

Meidu said it’s aware of the situation and that it doesn’t take part in daily operations at Xinhehui.

Shanghai-based P2P platform Yidai issued on a plan Dec. 29 to refund its lenders after months of losses. Yidai had about 32,000 investors with an outstanding principal balance of 4 billion yuan, and expects to repay them in three to five years.

Tougher regulations and rising bankruptcies have worried P2P investors, and lending on those online platforms has plummeted, according to data from Rong360.com, which provides information on financing and loan products.

As few as 300 P2P firms will remain by the end of the year, according to an estimate from Shanghai-based Yingcan Group. The number of operators dropped by more than 50 percent to 1,021 during 2018, it said.

“More companies have realized that the lending risk is growing,” said Yu Baicheng, Shanghai-based head of research at 01Caijing, an independent Internet finance researcher. “They can’t sustain their business because they’ve run into liquidity problems after expanding at such a large scale.”

(SD-Agencies)